Just as bad facts make for bad law, bad laws make for bad behavior and bad administration.  Nowhere are these contradictions more visible than when adjacent jurisdictions that have a shared interest in macroeconomic health think they can get away with boundary exploitation by taxing more on our side of the fence than those on the other side of the fence.

The absurdity of this is brought home when those who make the laws that they expect others to observe flout their own handiwork, as did unlucky Massachusetts state representative Michael J. Rodrigues, who discovered the damning evidentiary power of a cell phone camera, and didn’t like it.  As gleefully reported by the populist Boston Herald:

State Rep. Michael Rodrigues, inset, a Westport pol, was spotted over the [September 1, 2009 – Ed.] weekend piling booze into his car – emblazoned with his ‘House 29’ Mass. license plate – at a tax-free N.H. liquor store.

A Westport lawmaker who voted to hike the state sales and alcohol taxes was spotted brazenly piling booze in his car – adorned with his State House license plate – in the parking lot of a tax-free New Hampshire liquor store, the Herald has learned.

This is not Michael Rodrigues’ car, and any inference to the contrary is unjustified

Savor the scene: a guardian of the public trust smuggling booze into his home state, caught red-handed violating a law he personally helped make more onerous:

Michael J. Rodrigues’ blue Ford Crown Victoria, emblazoned with his “House 29” Massachusetts license plate, was parked outside a Granite State liquor store on Interstate-95 South over the weekend, according to a witness who provided pictures to the Herald.

The witness, who requested anonymity, claimed he approached Rodrigues, noted his State House plate, and asked if he was on personal or official business.  

Fear of retaliation from the apparently powerful is universal.  Good government is about eliminating potential retaliation.  Worse, those in power tend to use intimidation as a shield.

Rodrigues, who was loading booze into his car, snapped “mind your own business,” the witness said.

“Rich, you’re giving smugglers like me a bad name.”

The witness’ account was also posted yesterday on Citizens for Limited Taxation’s Web site.

And it’s a doozy:

As my family and I were driving back from York Beach my wife asked me to pull off at the NH liquor store on 95 south at the Mass border. When I pulled around to get a parking space you can imagine my surprise to see what I could only assume to be a Mass state rep’s car. He also had a Deval Patrick/Tim Murray sticker on his back window – so I assume he’s a democrat who voted in favor of the recent sales tax hike.

Our citizen journalist is right on both counts.  Mr. Rodrigues is a Democrat, and he voted yes on the tax hike.

How Mr. Rodrigues would prefer to be seen

The Westport Democrat, whose family owns a rug business, was among the lawmakers who voted in an unpopular 25% sales tax hike for Bay Staters.

Like any other level of government, states are businesses; they have to make their revenues match their expenditures.  When the economy shb

The increase pushed the sales tax to 6.25% and slapped that same levy on booze – the first time alcohol has been subject to retail sales tax.

So the guy comes out with a couple of cases of booze in his carriage and loads them into his car. I asked him if this was “official” business or personal. He was surprised by my questioning and asked what business is it of mine as to what he’s doing. I told him I was a Mass citizen. He said it was personal – I pointed out the state car with official plates and he said it was “his”.

“That car is mine, not the state’s”

A far cry from Harry Truman, who smacked a stamp onto any personal correspondence he wrote when he was President.

I didn’t ask him why he was in NH purchasing alcohol instead of supporting Mass businesses and the 6.25% tax they just levied on us common folk…

Observe that Mr. Rodrigues’s district is about as far from New Hampshire as it’s possible to be in Massachusetts.

Why didn’t he shop in Rhode Island, which is literally next door?  Perhaps because Rhode Island’s sales tax is 7.00%, even higher than Massachusetts’ recently boosted rate, which was enacted

The state Senate voted last night to increase the sales tax, lift the sales tax exemption on alcohol, and allow cities and towns to raise meals and hotel taxes, brushing aside criticism that higher taxes would hurt Massachusetts businesses by driving consumers over the border, particularly to tax-free New Hampshire.

Place-based taxation is predicated on the assumption that consumers cannot flee the law’s grasping hand.

Lifting the sales tax exemption on alcohol sold at package stores would raise another $80 million for those services, senators said.

Assuming people don’t change their behavior.  But they do:

Mike Cimini, owner of Yankee Spirits liquor stores in Sturbridge, Attleboro and Swansea, said he’s lost about 10% of his business since the booze tax went into effect Aug. 1.

10% dispirited since August 1

That’s the problem with static taxation; if you squeeze too hard, you get a bigger slice of a much smaller pie. 

Actually, Massachusetts takes only half that 1/8 slice

Discontinuous laws, such as variations across state lines, always create edge effects – people gain a macro benefit for a microscopic shift in their actions. 

The hike has been blasted by business owners, especially those on the New Hampshire border, who say the increase has driven business north.

Not only do such edge effects or borderline behaviors cut into taxation, they shrink the state’s economy in favor of its low-tax neighbors.

At 6.25%, Massachusetts would have the second highest sales tax rate of the six New England states plus New York. Only eight states nationwide have a higher rate.

So Mr. Rodrigues, instead of buying his liquor at the new 6.25% tax rate he imposed on us as well as himself, took advantage of his New Hampshire jaunt to load up tax-free:

At least live sales-tax free

In an online interview with The Standard-Times in New Bedford, he acknowledged buying the booze during a bathroom stop while he and his wife were on a weekend getaway in New Hampshire.

Aside from the potential hypocrisy, Mr. Rodrigues might have violated Massachusetts law:

State law prohibits transporting more than 20 gallons of malt beverages [Beer – Ed.] or three gallons of any other alcoholic beverage.

It’s unknown how much Rodrigues purchased at the New Hampshire store.

Pity the scofflaw?

That’s a government-legal parking space

Poorly designed laws inspire even more poorly-designed enforcement remedies.  (My favorite example of belligerent process-fixated legislation are laws making it illegal to have a radar detector in your car – or even more absurd, to use it.)

Prohibiting people from transporting beer or alcohol has no public purpose except to compel people to pay a gratuitous ‘captive-resident’ tax.  Aside from being parochial mercantilism, it criminalizes rational behavior.

Police have the authority to detain and charge anyone illegally importing booze into the state.

Poorly-designed enforcement remedies inspire intrusive administrative laws.  Under the Fourth Amendment, police may not conduct unreasonable search and seizure, legislation that has its roots in colonial America, particularly Massachusetts. 

In questing for more taxes, the Commonwealth of Massachusetts drives its citizens to shop out of state, makes smugglers of vacationers, and turns the Staties into the temperance police.

Keg-smuggler!

Authorities have also cracked down at the border, targeting Bay Staters seeking to avoid paying state taxes by crossing into New Hampshire to shop.

Doesn’t this sound like a banana republic?

Back to our citizen journalist:

He had his wife with him. I left ahead of him and as I was driving down 95 into Mass doing the speed limit, he blew by me doing about 75 in the left lane.

I guess those who pass the laws need not abide by them. You would think that hours of testimony from Mass businesses, saying how the increased tax and the alcohol tax would hurt them by causing people go to NH, would have had an effect on these weasels. But, alas, it’s proof again that they have no conscience and only serve their own interests and themselves.

So, who was this guy?  I didn’t even want to make him feel good or important by asking.

Mr. Rodrigues fell back on a well-known defense.  When caught red-handed, blame the witness.

He also blamed the brouhaha on “Republican demagoguery.”

Such demagoguery: his license plate says, Expect the best.

“Unfortunately, I think that’s why the Republican Party is in such bad shape in Massachusetts,” Rodrigues is quoted as saying. “The electorate here is smart enough to figure out what they’re up to.”

The late great Leona Helmsley may have expressed this attitude best:

“We don’t pay taxes.  Only the little people pay taxes.“

Is that what the people are smart enough to figure out?

You tax take my New Hampshire booze when you pry it from my cold, dead hands.

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Yesterday’s speculation on the relationship in cities between optionality (our ability to see others) and privacy (our desire to prevent them seeing us) used housing, the linchpin of cities, and the seminal study of peeping, Rear Window:

Wholesome or unhealthy?  Milk, a sandwich, and a telephoto lens

As we saw yesterday, the movie hinges when our skeptical audience surrogate, the ultra-refined Lisa, finally overcomes her well-mannered aversion of curiosity in favor of a civic duty:

“Tell me exactly what you saw and what you think it means”

Citizens must see, as Jane Jacobs would have said it, but citizens may not be vigilantes.  So they take their suspicions to authority, personified by crusty old Lieutenant Doyle:

Lt. Doyle: Lars Thorwald… is no more a murderer than I am.
Jeff: [stunned] You mean that you can explain everything strange that has been going on over there, and is still going on?

Doyle’s is the voice of etiquette:

Lt. Doyle: No, and neither can you. That’s a secret private world you’re looking into out there. People do a lot of things in private they couldn’t possibly explain in public.

Doyle’s is the voice of reason and restraint:

Lisa: Like killing their wives?
Lt. Doyle: Get that idea out of your head. It will only lead you in the wrong direction.

In cities, we owe each other the duty of not speaking ill, however much we may think it, until we are certain:

Jeff: What about the knife and saw I saw him wrapping up in newspaper?
Lt. Doyle: Do you own a saw?
Jeff: Well… yeah. At home in my garage, I keep…
Lt. Doyle: How many people did you cut up with it?

Citizens or criminals?  Or both?

Their dialog is reminiscent of a grand jury, with Jeff as prosecutor, seeking probable cause to indict, or at least to investigate:

Lt. Doyle: You didn’t see the killing or the body. How do you know there was a murder?
Jeff: Because everything this fellow’s done has been suspicious: trips at night in the rain, knifes, saws, trunks with rope, and now this wife that isn’t there anymore.
Lt. Doyle: I admit it does have a mysterious sound. But it could be any number of things for the wife disappearing. Murder is the least part.
Jeff: Now, Doyle, don’t tell me that he’s just an unemployed magician amusing the neighborhood with his sleight of hand. Don’t tell me that.

Reluctantly, Doyle investigates, and discovers that Thorwald put on a train to Pennsylvania a woman he represented as his wife.  Our citizens voyeurs’ reaction is characteristic and human:

Lisa: Jeff, you know if someone came in here, they wouldn’t believe what they’d see? You and me with long faces plunged into despair because we find out a man didn’t kill his wife. We’re two of the most frightening ghouls I’ve ever known.

Long ago, I lived for six months in Amsterdam, a community of the nicest, most pleasant, amiable, reserved urban dwellers I have ever known.  My coworker Joe Galloway lived in an attractive apartment in the near suburbs, on the second floor of a long line of two-story flats, with his balcony overlooking back yards from left to right as far as the eye could see.  All was tranquility – children playing on swing sets, barbecuing sausages, laundry hanging.  “Just once,” he said to me one evening, “I’d like to see somebody fall down drunk, or smack his wife, or scream with rage.”  Joe wanted to see drama – if only to drop the veil of pretense for a moment and see that the Dutch were as human as all of us.

Jeff is like that, digging for knowledge of what he is convinced must have happened:

Jeff: Those two yellow zinnias at the end, they’re shorter now. Now since when do flowers grow shorter over the course of two weeks? Something’s buried there.

What’s buried in the garden?

The morning after a neighbor’s dog paws at the zinnias, the sun rises to a dead dog on the patio:

Jeff: He killed a dog last night because the dog was scratching around in the garden. You know why? Because he had something buried in that garden that the dog scented.
Lt. Doyle: Like an old hambone?
Jeff: I don’t know what pet names Thorwald had for his wife.

Joke, yes – but echo of private intimacy.

Because Jeff sees but is not seen, he has the stalker’s advantage.  He can provoke Thorwald, which he does. 

The weapon: one-way knowledge

He has Lisa slip a note under Thorwald’s door – observe how Jefferies the protagonist plays with the other characters as director Hitchcock plays with his actors, himself never moving but ordering them about and filming their actions and responses. 

Triumph and terror in one shot

When Thorwald is reading it, he dials the phone:

Go ahead, Thorwald – pick it up.  <Venomously.>  You’re curious.  You wonder if it’s your girl friend calling.  The one you killed for.  Pick it up, Thorwald!

            Hello.

Did you get my note?

Well, did you get it, Thorwald?

            Who are you?

I’ll give you a chance to find out.  Meet me in the bar at the Brevoort, and do it right away.

            Why should I?

For a little business meeting – to settle the estate of your late wife.

            <Pause>  I don’t know what you mean.

Now stop wasting time, Thorwald, or I’ll hang up and call the police.

Thorwald has almost no dialog – less than a hundred words total, and his character is carried entirely by Raymond Burr’s ominous body language and heavy-footed stride, as if with every breath he is knifed anew by his crime. 

Where is my tormenter?

In his response to Jeff we hear the cracking of panic:

            <Breathing heavily>  I only have a hundred dollars or so.

That’s a start.  I’m at the Brevoort now.  I’ll be looking for you.  <Hangs up>

Now that he has embarked on intervention, Jeff cannot stop.  When Thorwald is away, Lisa burgles Thorwald’s apartment, finding Mrs. Thorwald’s jewelry.  Thorwald returns as she is signaling to Jeff, and though the police arrive, Jeff pays the price of peeping: Lisa signals, and Thorwald looks across the courtyard into Jeff’s rear window:

In the moment of our seeing, anonymity is lost

The rear window is thus symbolically the window into our private soul.  In our work environments, everybody likes an office, but we learn to accommodate workstations and partitions.  We sacrifice a bit of our privacy because we can afford to do so during our daylight, public hours.

By contrast, Thorwald has had his privacy violated.  Murderer though he be, his scraps of dialog ring with the bewilderment of the urban dweller suddenly denuded of the veil of his privacy.  As he stalks Jeff in Jeff’s apartment, out from his comes a monolog of lamentation:

What do you want from me? …  Your friend – the girl – could have turned me in.  Why didn’t she?

What is it you want?  A lot of money?  I don’t have any money.

Say something.

Say something!  Tell me what you want!

Our first non-jeff POV; his tormenter as seen by Thorwald

He is not so much vengeful, nor even murderous, as genuinely outraged and fittingly, he seeks to defenestrate Jeff:

I’ll give you a good look out the window!

That’s the climax – the price of peeping, the price of one-way seeing is that when you are seen, you are culpable, and vulnerable.

In cities, the privacy we want is a one-way mirror, where we can see out but no one can see in.  This is impossible, but we seek it.

Miss Torso’s loving husband comes home

No one ever said we were consistent.

Consistency would be so dull

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A.         Rental is always disfavored in political resources. 

You wouldn’t find the answers in a 1922 booklet by M. W. Folsom, “The Facts about Home Owning“, from A Home of Your Own.

Rental always wishes it got as much political love as homeownership

I’ve never yet found a government that devoted more political resources to rental than homeownership.  Partly this is simple political calculus – most modern societies (both rich and poor) are predominantly homeownership, so promoting homeownership is where the votes are.  Yet even on a per-capita basis, homeownership is favored. 

The deductibility of home mortgage interest is a tax expenditure of $85 billion annually equal to roughly 2½ times the aggregate HUD budget.  Add to that the deductibility of real estate taxes ($14 billion a year), and the capital-gains exclusion on sale of a principal residence ($30 billion) and as a nation we spend about $130 billion annually on Federal incentives for homeownership, about four times the entire HUD budget.

The disparity is even greater outside the US, and in the global south, affordable housing is all but synonymous either with promoting homeownership or slum upgrading.

B.         Everybody needs rental at some time in their lives.   While there are plenty of benefits of homeownership, in our modern world – and this is true both for the developed, economic world and the emerging nations and cities of the global south – some part of everyone’s life is spent in rented accommodations. 

Most people start their families in rental and move to owned homes

* If we don’t need rental and roommates immediately after high school or college, we need rental when we’re a young single or couple trying to minimize our monthly expenditures. 

* We need rental when we care about labor mobility to follow the jobs and to create our careers. 

* We need rental when we want to cut our housing expenditure and our housing consumption. 

* We need rental when the children are grown and we want to move out of a too-big house and back into urban living, for a short walk to a longer life.

* We need rental as our physical and psychological horizons shrink, and we want others to take care of us.

Home builder propaganda, with remarkable reasoning – see below

The pamphlet’s logic notwithstanding, rental is cheaper than home ownership.  Partly this is ecosystemic, partly it’s economic – renters consume less housing per family than do homeowners.  What’s amusing about the1922 pamphlet are the lengths it goes to manufacture a favorable comparison:

The Owned Home Reduces the Cost of Living

If you can’t read the fine print in the image, here’s some of the cost savings in family expenses claimed for 1922 homeownership:

C.        Rental is harder to do right.  Compared with homeownership, rental is more complex to own, to manage, and to finance, for numerous reasons:

Longer use and risk periods.  In homeownership, the financier and developer are in the transaction only from groundbreaking trough sale.  The long-term loan is an investment in the owner-occupant, and personal home mortgages are recourse.  Recent subprime developments notwithstanding, lending for owned homes is generally safe.

Making the economics work.  Market apartments have one goal – maximizing NOI.  Affordable apartments, which balance economics and affordability, have an ongoing inherent tension, and it’s easier to slip.

The perfect balance seldom arises naturally

Public-private partnership.  Affordable rental, with its dual mission, requires public-private partnership because government makes a much better regulator than owner. 

Means-testing can be a poverty and dependency trap.  Over the last eighty years, as we have worked continuously on the eternal problem Why are people poor?, we’ve tried multiple approaches to housing and family assistance.  None of them have worked very well, and some – like well-intentioned means-tested and means-adjusted rents – have very nasty unintended consequences, like creating high barriers to employment.

Let’s make sure the incentives work right in rental, too

Each of these challenges requires a time-and-place-specific solution, and ongoing vigilance and operational capacity.  All this makes rental a harder tenure to make work in policy terms.

When urbanites think happy, do they think apartments?

D.        Poor people require more government help than rich ones.  Affordable housing always costs money – and the amount rises as people get poorer.  Because housing effective demand is elastic, people can afford to pay about 30% of their income for housing costs; they always have to choose whether to pay more or consume less. 

Meanwhile, you are what you live in, and if we wish to grow responsible adults and healthy families, we have to give them quality housing.  That costs money – more money for poorer people. 

As a society, as a polity, we often shrink from paying what we should. 

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In country after country, situation after situation, I’ve found that when people think of housing, they instinctively equate it with homeownership, and when making distinctions, ownership is seen as good, rental as bad.  A great set of examples, of stupefying bluntness, comes from a 1922 booklet by M. W. Folsom, “The Facts about Home Owning“, from A Home of Your Own.

“Brown rents,” runs the caption.  “Haven’t you seen him scratch matches on the wallpaper?”

What makes this image compact is its twin prejudices:

Just listen to the portentous introduction as it wheels out all the prejudices:

What makes prejudice so difficult to combat is that it is never voiced, so we who believe in rental have to voice them to challenge them.  They include:

1.        Renters are ‘those people’.  As I’ve posted before, it’s human nature – especially for the successful – to equate worldly success or failure with moral character.  It’s also useful vaccination against guilt – I don’t need to help the poor, runs the thinking, because their poverty is their own fault.

2.        For good people, rental is an inferior tenure.  Every politician I’ve ever met, more or less everywhere, values homeownership as a public and societal good.  Only a handful of politicians I’ve met anywhere value quality affordable rental as a public good.

America’s President, 1922: a man who undoubtedly valued homeownership

Everybody wants homeownership, but that’s just shorthand.  What everybody really wants is quality housing, security of tenure, and controllable occupancy costs.  Once those benefits of homeownership are in hand, if people are called upon to trade (say) appreciation for lower occupancy payments, many will plump for the lower rent.

3.        Rental depresses property values.  Even as we allow that those who own homes are strongly inclined to invest in them (for home ownership does change behavior), I know of no evidence that the NIMBYites‘ fears are justified. 

Quality affordable housing is good for localities; it does not depress property values – at least not in any statistically valid way – and to the extent it reduces commute times or increases workforce housing availability, sustainable affordable housing is good for communities, but to hear the locals talk, you wouldn’t think so. 

4.        Rental means slums.  This one contains a germ of syllogistic logic.  Because slums are economically rational, and because urban land is always valuable, nearly all urban slums are rental. 

Edinburgh’s India Street, 19th century

Even if all slums are rental, not all rentals are slums.

In terms of physical configuration and financial instruments, home ownership in the United States was a solved problem by the 1890’s.  (Defending against economic depressions wasn’t a solved problem, and when the economy collapsed, housing prices collapsed with it, but that’s a different story.)  The twentieth century’s great triumph of housing policy has been the invention of long-term permanent professional rental sector, and the subcategory of quality affordable housing. 

5.        All landlords are bad landlords.  Like the preceding prejudice, this one too has a grain of truth.  Landlord is not an elective office, not a popularity contest.  Slums have winners, including slumlords – and in 1922, that is what most landlords were, with the exception of a handful of socially-minded reformers like Jane Addams of Hull House and England’s Quaker charities.

Thus, just as the twentieth century saw the invention of quality affordable housing, its final quarter – basically, from 1975 through 2000 – saw the birth and emergence of genuine mission entrepreneurial entities (MEEs), for-profit and non-profit, as professional affordable landlords.

If all those prejudices are false, what is true about rental?

[A related post  will appear tomorrow.]

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